It was the highest level of annual overseas arrivals on record and pushed population gains well above the 85,000 a year the state government had projected until 2036.

Camera IconNSW built a record number of houses last year but it was not enough to accommodate population growth.Picture: News Corp Australia, Jonathan Ng

Meanwhile, a record 38,700 new homes were built in Sydney but this fell short of the 41,250 dwellings needed each year to meet underlying demand, according to an Urban Development Institute of Australia (UDIA) report.

Potential shifts in migration policies before next year’s federal election could also represent a watershed moment.

“Polls show nearly 74 per cent of the electorate is in favour of putting a limit to migration and if one of the big parties were to propose that, it could be a walkover at the next election,” Mr Christopher said. “The results of such a policy would be very interesting for the housing market.”

Housing Industry Association economist Shane Garrett said curbing migration would be a mistake. “We cannot simply close down our cities,” he said. “The solutions lie in better city planning.”